Officiallty, Britain has been in a recession since 2008 after suffering two quarters with negative economic growth.

Since then, both the UK and the US have tried many so-called "stimulus" plans to try and give thier econimies a much needed boost and get banks to start lending again.

The latest package to be put forward is £100 billion deal to try and uplift world trade and get economy back on the rise.

But where does the money come from? Typically it comes out on a loan, but the government has spent without limits, and what happens when we are out of recession and need to pay these loans back?

Will it mean we stay in recession for longer? What should the government do to help the economy? Discuss below.

deanhills

I believe Britian was already in trouble before the recession started. The Footsie was never
as high as the Dow Jones was, have a feeling that your savvy investors from the UK were investing in the US Stock Exchange. So possibly the UK is going to go through a worse recession possibly than the rest of the world. Brown was already responsible for bad finance decisions when he was Minister of Finance, seems as though he is still butting in and Darling more or less a "yes" man in his cabinet.

ocalhoun

The greater danger: what happens if nobody agrees to lend the money?
I don't know who the UK would borrow from, but the US borrows mainly from China and Japan. If they refused to buy any more US government bonds, then interest rates skyrocket as they try to raise the rate to a point where someone will buy them. Then, if there is still nobody buying, the only way we'd have left to fund these ridiculously expensive projects would be to simply print the extra money. That leads to extreme inflation, the currency becomes worthless, and we get a real depression.

And, personally, I wouldn't blame them for not buying any more debt from the US... How exactly are we planning on paying them back? By borrowing more?

deanhills

ocalhoun wrote:

The greater danger: what happens if nobody agrees to lend the money?
I don't know who the UK would borrow from, but the US borrows mainly from China and Japan. If they refused to buy any more US government bonds, then interest rates skyrocket as they try to raise the rate to a point where someone will buy them. Then, if there is still nobody buying, the only way we'd have left to fund these ridiculously expensive projects would be to simply print the extra money. That leads to extreme inflation, the currency becomes worthless, and we get a real depression.

And, personally, I wouldn't blame them for not buying any more debt from the US... How exactly are we planning on paying them back? By borrowing more?

Good point. Am very confused right now however as wonder whether there is a real problem and whether all of it has been a ploy to get more money from their citizens? Citibank made a profit and said it may not need bail-out money, and the stocks have taken off. I have not heard anything about changing the bail-out package though.

Bikerman

ocalhoun wrote:

The greater danger: what happens if nobody agrees to lend the money?
I don't know who the UK would borrow from, but the US borrows mainly from China and Japan. If they refused to buy any more US government bonds, then interest rates skyrocket as they try to raise the rate to a point where someone will buy them. Then, if there is still nobody buying, the only way we'd have left to fund these ridiculously expensive projects would be to simply print the extra money. That leads to extreme inflation, the currency becomes worthless, and we get a real depression.

And, personally, I wouldn't blame them for not buying any more debt from the US... How exactly are we planning on paying them back? By borrowing more?

The greater danger: what happens if nobody agrees to lend the money?
I don't know who the UK would borrow from, but the US borrows mainly from China and Japan. If they refused to buy any more US government bonds, then interest rates skyrocket as they try to raise the rate to a point where someone will buy them. Then, if there is still nobody buying, the only way we'd have left to fund these ridiculously expensive projects would be to simply print the extra money. That leads to extreme inflation, the currency becomes worthless, and we get a real depression.

And, personally, I wouldn't blame them for not buying any more debt from the US... How exactly are we planning on paying them back? By borrowing more?